News

Presidential Debates to Highlight Fiscal Cliff

This week includes key economic reports that stand to give the Street a peek at the condition of the economy. While it is too early to gauge the impact of QE3, as it is launched is the benchmark from which we can track its success, or failure.

The first Presidential Debate is Wednesday. The debates will highlight the potential horrors of falling off the fiscal cliff if Congress continues to refuse to find common ground on tax and spend issues.

If only European leaders were as efficient and focused as the Ryder Cup team they sent over this past weekend. For non-golfers, they came from far behind Sunday to edge out the American team in what was one of the most exciting golf matches ever played – 60,000 fans crowed the fairways to watch, tens of millions watched on TV.
On a more somber note, not all is well abroad between Germany, the ECB, European finance ministers, Spain and Greece.
Once again, it is a question of citizens of Greece and Spain painful austerity programs in order to qualify for financial aid.
This could get uglier before it is resolved. Greece may need more aid, when does it end ?
Fortunately, Europe, China, Japan, India, Brazil, Canada have undertaken efforts to arrest softness in their respective economies and stimulate growth, which is critical for troubled countries that must generate revenues to address debt issues.
CONCLUSION:
The question here is, can the pressure on money managers to pack their clients’ portfolios with stocks override the uncertainties overhanging the market ?
Technically, the market is in greenstick fracture mode, in line for further correction/consolidation.
Resistance starts at DJIA 13,490 (S&P 500 1448)
Support at DJIA 13,400 (S&P 500: 1436) must hold to prevent a further sell off.
NOTE: If you want a good summary of current economic indicators including stack and line charts of each go to www.mam.econoday.com. I can only touch on these here, but this site gives you a great picture. Most times, new info is posted Sunday morning. Be sure to access its “Resource Center – U.S. & International Recaps at the top of the home page. Excellent !

FACEBOOK (FB - $21.66):
Friday: FB rallied strongly from the opening bell Friday and it looks like it has traced out a double bottom and possibly a “Head and Shoulders reverse pattern with the potential of returning to the mid-20s. Presently resistance gets really formidable at $22,68.

I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because I felt at $34 it was very vulnerable in face of all the misunderstanding and hype.

ECONOMIC DATA:
I will publish a list of the week’s key economic reports on Monday only, but follow up on ones where appropriate.

MONDAY:
PMI Mfg. Ix (9:00) – Unchanged in September at 51.5. New orders were up slightly.
ISM Mfg.Ix, (10:00) –Slipped deeper into negative territory in August due to a decline in production
Construction Spending (10:00) – Dropped 0.9% in July after a 0.4% gain in June

TUESDAY:
Motor Vehicle Sales (?) – Gained 3.1% in August after a 2.0% drop in July. Annualized sales per month in August were 14.5 million units, best since February.

WEDNESDAY:
ADP Employment (8:15) – Private payroll employment gain was estimated at 201,000 in August. Gains have been volatile since early February.
ISM Non-Mfg Ix (10:00) – Rose 0.5 tenths to 52.6 in August. New orders rose 1 point to 54.3. Business activity, a sign of output of goods and services jumped 5.5 points to 57.2 in July.

THURSDAY:
Jobless Claims (8:30) – Dropped sharply for the week September 22, by 26,000 to 359,000 bringing the 4-week average down 4,500 to 374,000.
Factory Orders (10:00) – jumped 2.8% in July after an increase of 0.5% in June due primarily 4.1% surge in Durable Goods
FOMC Minutes 2:00 p.m.) – The FOMC releases the minutes of its meetings with a three week delay, thus increasing its transparency. Meetings are held 8 times a year. While Fed officials have already commented on the last meeting, more detail is included in the release.

FRIDAY:
Employment Situation (8:30) – Nonfarm payroll employment increased a modest 96,000 in August after gains of 141,000 in July and 45,000 in June. The unemployment rate slipped to 8.1% from 8.3%.

George Brooks
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